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Pondera FraudCast Blog

Pondera FraudCast

Welcome to the Pondera FraudCast, a weekly blog where we post information on fraud trends, lessons learned from client engagements, and observations from our investigators in the field. We hope you’ll check back often to stay current with our efforts to combat fraud, waste, and abuse in large government programs.

Regular readers of this blog know that we often focus our comments on the fraud and abuses in government subsidy programs. Our intent is almost always to point out solutions that can make these programs more effective, rather than to question the existence of the programs altogether. In fact, most Pondera employees worked for government agencies in the past and recognize the good that many programs deliver.

The recent fires in California provide an example of government programs helping Americans in need. The fires, which tore through California’s wine country, including Napa and Sonoma, claimed over 40 lives and 7,000 structures, and displaced nearly 100,000 people. Entire neighborhoods were destroyed leaving families scrambling for shelter and food.

A number of government agencies sprang into action to help those affected by the disaster. While most Americans are somewhat familiar with, for example, how FEMA responds to disasters, other efforts are less obvious but very important.

For example, I took note of the combined efforts of the United States Department of Agriculture (USDA) and the California Department of Social Services (CDSS) to provide emergency food assistance to local residents. Using the Disaster Supplemental Nutrition Assistance Program (D-SNAP), CDSS offered a month of food benefits to those who qualify. This is in addition to other waivers such as allowing existing SNAP beneficiaries to purchase hot foods (many lost their homes and by extension their ability to prepare foods).

Events like the fires in California, while heartbreaking, also provide us with a reminder of the important work done by federal and state government agencies. This is also a time to remember the important work that agencies do throughout the year to support Americans who truly need our assistance. We believe our job at Pondera is to help governments deliver better services by driving fraud, waste, and abuse out of their programs.

I once worked for a manager that operated under what he called his “Bucket Theory”. His theory went like this: hire successful people, throw them in a “bucket”, and see who can climb their way out. Those that did, he explained, were the type that could succeed at this particular tech company. Those that couldn’t climb out were soon shown the exit. Pretty Spartan of him.

When I founded Pondera, I thought it might be interesting to make modified use of the “Bucket Theory”. Here’s how my theory goes: hire skilled and dedicated people with diverse backgrounds and experiences, broadly define the problem that needs to be solved, then throw them in a “bucket” and ask them to come up with a solution for the problem. The only guidelines: treat each other with respect, expect mistakes, share in success, and “think outside the bucket”.

Turns out that this modified bucket theory works pretty well. I’m constantly amazed by the innovations made by Pondera’s employees. And walking around the office, it’s not unusual to see a former FBI agent working with a PHD in Learning and Mind Sciences, an Unemployment Insurance investigator collaborating with the former founder of a Silicon Valley drone company, or a data scientist talking with a Certified Fraud Examiner.

Since founding Pondera, I’ve read a number of articles about the importance of hiring staff from “adjacent” markets. For example, one article detailed how some skateboarders were able to help improve construction site safety equipment. And I think we’ve all seen images of football players in training sessions with ballet instructors. I imagine that the conversations between these two groups were equally as entertaining as the ones among Pondera’s employees.

So why don’t more companies take this approach? I think there are two main reasons for this. First, many companies start with or develop the belief (sometimes arrogance) that their way is the only way. Like the proverbial hammer, they subsequently see every problem like a nail. The second reason: it can be very difficult to maintain a healthy company culture across such varied career experiences. Success depends on a clear and transparent vision combined with world class human beings. I personally feel very fortunate to work side-by-side with such people in the Pondera Bucket.

Earlier this week, I was surfing one of Pondera’s internal messaging boards when I came across a photo of some painted rocks depicting flying pigs with multi-colored unicorn horns. It seems that one of our investigators is also a part-time artist. I must admit that I was confused by the subject matter. This is the response that I received to my question about the rocks:

Within Pondera’s Special Investigations Unit, you have to earn the flying pig rock by accomplishing something that others might consider implausible, so that they’d say “that’ll happen when pigs fly”… but more than that, you also have to do it like only a beautiful, magical unicorn could do it.

This is absolutely one of the most unexpected and satisfying things I’ve discovered in all my years in business. This tradition explains so much about Pondera’s success. We have a team of incredibly successful and dedicated people that continue to work on doing what many previously thought impossible. They do it themselves with only broad guidelines from the management team (hence my not knowing about the “pigacorn”). And they have fun while doing their work, taking pride in knowing how truly important it is.

While I continue to take pride in the success that Pondera is having fighting fraud alongside our clients, my recent discovery serves as yet another reminder of what makes this company go (dare I say fly?). I often say that everyone at Pondera left something great to join our team and align behind our mission. With people like that, I expect a lot more flying pigs and a lot less fraud.

A recent spate of high profile arrests of dentists is drawing attention to an often-overlooked segment of Medicaid fraud. Some unscrupulous dentists are exploiting gaps between what private insurers reimburse versus what Medicaid will pay for. Others are just brazenly breaking the law to rip off state Medicaid programs.

Consider these recent charges brought against dentists:

An Anchorage, AK dentist was charged with 10 felonies. His “care” included performing a tooth extraction while videotaping himself on a hoverboard. Naturally, he had to text the video to friends. He is also accused of giving expensive, and unnecessary, IV sedations to Medicaid patients and then performing unneeded procedures on his passed-out patients. Since private insurance rarely pays for IV sedation, he only performed this fraud scheme on his Medicaid patients.

A Fairfield, CT dentist who saw mostly elderly and indigent patients is accused of ripping off more than $900,000 from Medicaid by billing for services that he never performed. One hint that he may have not been acting honestly: he billed for both a cavity filling and denture procedure on the same tooth!

An Atlanta dentist was sentenced to 18 months in prison earlier this year for defrauding nearly $1,000,000 from Medicaid. Her unique talent included the ability to perform dental procedures in Atlanta while she was traveling out of the country.

Unfortunately, these cases simply support our premise that fraud will exist anywhere substantial amounts of money are exchanged in complex billing and regulatory environments. These, and other similar cases, serve as a warning that we must monitor literally every medical specialty reimbursed by Medicaid.